The Financial Services Commission has proposed amendments to banking supervisory rules that would cap banks’ real estate project finance credit at 20% of total credit extensions, clarify permitted face-to-face services for internet banks, adjust the treatment of foreign currency settlement accounts and strengthen internal control assessments for specialized banks. The project finance measure implements the banking component of a cross-sector framework announced in December 2025, alongside limits being advanced for insurers and other financial businesses to curb concentrated exposure. Internet banks would be permitted to conduct face-to-face activities where unavoidable, including debt management and restructuring discussions, original document and collateral checks, and compliance with legal obligations. Amounts held for no more than three business days in foreign currency settlement accounts would be excluded from credit extensions to major shareholders. For specialized banks, internal control would become a separate management assessment category and its weighting would rise from 3.2% to 10%. The amendments are expected to proceed to a tentative Financial Services Commission decision on Dec. 2, 2026. The project finance cap would take effect on Jan. 1, 2027, with banks above the limit given three years to comply.
South Korea's Financial Services Commission consults on 20% bank real estate project finance cap and wider supervisory changes
The Financial Services Commission has proposed a 20% cap on banks’ real estate project finance credit, alongside changes for internet bank services, foreign currency settlement accounts and specialized bank assessments. The cap would take effect on Jan. 1, 2027, with a three-year transition for banks exceeding the limit. Specialized banks’ internal control assessment weighting would rise from 3.2% to 10%.